I am co-founder of FaraiMedia.com, an online and mobile advertising platform which focuses on Africa. I am a recipient of the 2014 “Emerging African Leader Award” by TEMPLE University in Philadelphia, Pennsylvania. I have an M.B.A from The School of Business & Industry (SBI) at Florida Agricultural & Mechanical University. For more, check out my website, www.FaraiMedia.com and follow me on Twitter @FaraiToday

Standing in the lofty hallways of the Columbia University in New York City, dressed in denim jeans, crisp white shirt, dark-colored suede blazer and his signature horn-rimmed glasses, one could have easily mistaken Nigerian oil tycoon, Tinubu for an ivy league law or business professor; fashionably modern but unassuming even though he sits at the helm of a $1.7-billion energy conglomerate.

During the Columbia UniversityAfrican Economic Forum fireside chat that I conducted with Tinubu, he announced that in 2013-14, his company had acquired the Nigerian upstream oil and gas business of ConocoPhillipsConocoPhillips (NYSE: COP), an American multinational energy corporation in a USD $1.7 billion transaction (USD $1.5 billion after adjustments).

The exclusive interview with Tinubu appears as the feature story in the July 2014 issue of Forbes Africa magazine as “The Nigerian Oil Baron Buying Up America”.

Wale Tinubu, Group CEO, Oando PLC

Farai Gundan: In 2014, what are some of the challenges that someone in your position faces?

Wale Tinubu: 2014 was an interesting year for us; we acquired American multinational energy company, ConocoPhillips’ Nigerian operations in a USD $1.7 billion transaction. We were looking to acquire a company that was three times our size. We had to do several rounds of fundraising, which we successfully did. We did a “rights of issue” first, then a private placement, and then we organized a corporate facility. We had about 5 to 6 work series running simultaneously in an environment where we were deemed not to be able to do the transaction because it was unheard of anybody in Nigeria wanting to do a USD $1.5 billion or $1.7 billion transaction in such a short space of time. Finance is still a challenge and has always been a challenge in Africa.

Our ultimate goal was to diversify our business to the upstream side, where there’s a substantial amount of profitability. So, we moved right across the value chain, not necessarily deciding where we would invest based on return but also based on what opportunities existed for us. We also looked at how our long-term strategies clear when we start to implement or execute within our local environment. I learnt something the hard way; never confuse a clear line or sight with a straight line of execution. In Africa, you will face all sorts of challenges in the process of getting to your goal, but you’ve got to deliver at the end of the day.

Gundan: Could you give us a flavor of how you view the bankers that you see; local, international, across Africa and which you found most approachable in helping you achieve your growth?

Tinubu: We have had to extract financing from different parts of the world and from different classes of institutions and put them together to satisfy the project that we do.

You’ve got your conventional method; for example, Africa has a lot of short term funding and very little long term funding. So you will end up having to build a four year project using bank over drafts which means that they have a right to call-in those overdrafts during the time you are building out the assets. So as we grew larger we found that we could take the short term funding that was available, raise equity; part of why we listed was to attract a different poll of investors but even then there’s a limit to the investors that would come into the Nigerian Stock Exchange (NSE). So we did the Johannesburg Stock Exchange (JSE) listing. There’s still a limited number of those that would come in via the JSE because the JSE is also a limited exchange though not as limited as the NSE. We ended up listing our E & P (exploration and prodution) company on the Toronto Stock Exchange (TSX). So bringing equity has also enabled us to access different kinds of financing because then you can go to the global debt providers and say you are a listed company and you’ve got ‘x’ amount of equity and you require ‘x’ amount of debt. You get rated for example and then you demand longer term funding which is invariably cheaper.

Gundan: Where does Oando stand in Corporate Social Responsibility (CSRCSR) and doing community outreach, especially in the Niger Delta area where a majority of your business is based? Additionally, during the Niger Delta militant crisis how were you able to manage your oil business and remain profitable, if at all?

Tinubu: CSR for us at Oando is primary education. We have about 86 primary schools, where we have expanded the schools and provide all the amenities. The next phase is teacher-training where we grant scholarships to our graduates for secondary and eventually, university education. We have a foundation where we contribute a percentage of our profit after tax. Through the foundation we build schools in every community that we work in. We focus on education because I think that giving people primary education is the first step in giving them the capacity to make choices. You get people out of poverty by simply giving them knowledge. In my opinion, the most important level of knowledge in Africa is primary education.

In terms of the Niger-Delta crisis, first of all there was a political element regarding the revenue derivation in Nigeria that has been fixed- 13% of all oil produced goes to the oil producing state. Then there was the criminal element which people attacked pipelines and siphoned crude oil in the middle of the night, put the crude oil in barrels and shipped them out. At Oando, we started improving our security; I think indigenous participation is critical to our security because once the community is involved in the production of certain assets they feel responsible for those assets. We have done a great job at encouraging and ensuring that we work hand in hand with the communities which we have our operations in. And that really helps us ensure we have relatively few disruptions and few incidents that we can’t resolve.

Gundan: What is your perspective on inter-country relations & commerce on the continent? Do you have commercial or business presence in other African countries? How can your business model be translated to a pan-African level?

Tinubu: It’s a big problem in my continent. I think the percentage of intra-country trade within Africa is 3% or less. A bulk of the trade is outside of Africa. It started from the colonial days where Africa’s natural resources from agriculture to minerals were transported from the mines or plantations to the coastal ports and ultimately to the colonial powers. The railway systems didn’t link the continent but instead went from the mine or plantation to the port for export. Therefore we could only look to our colonial partners to do business because that is what our infrastructure dictated.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.